Public Act 282 of 2014, which makes a number of "technical fixes" to the Michigan Business Tax (MBT), was quickly passed by the Legislature and signed by Governor Snyder last
night. Taxpayer advocates have pushed for the MBT changes for several years now, but the sudden movement of the bill is really the result of a special
enacting section that was added this week.
The enacting section repeals the Multistate Tax Compact (MTC), (PA 343 of 1969), retroactively to January 1, 2008. The MTC provides rules for the apportionment of the tax base of multistate taxpayers. The repeal of the MTC is intended to overturn the Michigan Supreme Court's recent decision in IBM Corp v Department of Treasury, where the Court held that the taxpayer could elect to use the MTC's three-factor apportionment formula, instead of the single factor sales formula dictated by the MBT. Although the MBT was replaced in 2011 and the MTC was amended that year to remove the election, the Department of Treasury claims that the state would be liable for an estimated $1.1 billion in tax refunds if the decision were allowed to stand. However, even though the legislation has become law, there are unresolved questions regarding whether the MTC changes are constitutionally valid. If you have an MBT apportionment case pending or are considering filing for a refund based on the IBM case, we suggest you contact one of our SALT attorneys to discuss the available options.
PA 282 also makes the following changes to the MBT. These changes are retroactive to January 1, 2010. The amendment requires that any taxpayer filing a claim for refund as a result of these changes must do so during the 2015 calendar year and provides that refunds will be paid in annual installments over 6 years beginning in 2016.
If you have any questions or would like further information about the new law, please contact one of the SALT attorneys listed below:
Lynn A. Gandhi
313.465.7646
lgandhi@honigman.com
June Summers Haas
517.377.0734
jhaas@honigman.com
Mark A. Hilpert
517.377.0727
mhilpert@honigman.com
Stewart L. Mandell
313.465.7420
slmandell@honigman.com
Brian T. Quinn
517.377.0706
bquinn@honigman.com
Steven P. Schneider
313.465.7544
sschneider@honigman.com
Khalilah V. Spencer
313.465.7654
kspencer@honigman.com
Daniel L. Stanley
517.377.0714
dstanley@honigman.com
Alan M. Valade
313.465.7636
avalade@honigman.com
Patrick R. Van Tiflin
517.377.0702
pvantiflin@honigman.com
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